Central bank reiterates prudent monetary policy

BEIJING - China's central bank said on Sunday that the country will continue to implement the prudent monetary policy while fine-tuning it at the proper time.

It will keep a stable and moderate growth in its credit supply as well as social financing, said the People's Bank of China in a statement issued after a quarterly meeting of its monetary policy commission.

This came after a statement from the State Council on Wednesday, which vowed to continue the prudent monetary policy stance, firmly guard against systemic risks and make sure that credit gets channeled into real economy.

The central bank said the national economic operation and financial sector are "generally stable" while consumer prices being "basically stable," but it also highlighted challenges and risks.

The PBOC said it will maintain the stability and continuity of macro-economic policies while optimizing the allocation of "financial resources" to support economic restructuring and guard against financial risks.

China's economic growth has been slowing. The 7.8-percent growth rate in 2012 was its slowest pace in 13 years, and economic data released so far in 2013 were not quite encouraging.

The PBOC has been taking a tough line with Chinese lenders. It refused to inject cash into the financial system in the past week despite a spike in domestic interbank lending rates and evidence that the economy is slowing.

Analysts saw the move as the PBOC's attempt to force domestic lenders to stop channelling money into the informal banking sector, known as "shadow banking," which has boomed in recent years and fueled concerns about financial risks.

The central bank vowed to improve the formation mechanism for the yuan exchange rate and maintain its basic stability. It also said it will move ahead with interest rate liberation.